The following diagram (21.2) illustrates the production possibilities set out in the above table. an increase in technology and quality of physical capital that improves labor productivity. And if this country wants to increase the production of clothes from 100 to 150 units, they must sacrifice the production of 25 units of food. Technology innovation is a factor in many industries. Keep in mind that some texts will call it the production possibilities curve (PPC) while this post calls it the production possibilities frontier. an increase in the quantity of labor and in productivity. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. The downward slope of the production possibilities curve is an implication of scarcity. By relaxing the assumption of given and constant production with the help of the production possibility curve the increase in the production of both the goods than before. Technology has a great impact on short-run curves by when technology advances then production of units will increase. An increase in the physical quantity or in the quality of factors of production available to an economy or a technological gain will allow the economy to produce more goods and services; it will shift the economy’s production possibilities curve outward. More efficient production reduces costs and allows for larger production numbers at lower prices. This means that, for any given level of butter production, the economy will be able to produce more guns than it did before. Technological Progress: Technical progress enables an economy to get more output from the same quantities of resources. Production possibilities can change if resources increase within a business. In the example above, an advance in gun-making technology makes the economy better at producing guns. If technology changes in an economy, the production possibilities frontier changes accordingly. Production possibilities is the extent of production in businesses. View the answer now. A production possibilities curve shows the combinations of two goods an economy is capable of producing. The number of competitors is … how does technology increase production possibilities was asked on May 31 2017. a decrease in labor … This causes output to increase, so the production possibilities curve shifts outward, or to the right. On the other hand, let's say a major war causes destruction of capital equipment in the country. An outward shift of the production possibilities frontier is only possible if the country discovers new resources or there is an improvement in technological development. 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